Most European governments now include prosperity and economic security within their definition of national security. Yet they appear slow to recognise and address the long-term economic harm that will very likely arise from an overdependence on Chinese low-carbon technology.

The most obvious risk is in low-carbon technology manufacturing. Unless the trend towards China’s dominance is mitigated or slowed, particularly in certain segments, Europe’s industrial competitiveness in this area will continue to erode. China has clearly articulated in national documents – such as its 2015 ‘Made in China 2025’ industrial strategy – that it intends to dominate high-tech sectors, implicitly at the West’s expense. Its execution of this strategy in relation to low-carbon technology, particularly the ‘new three’ of EVs, solar, and batteries, has been highly effective. Where the West once led, China now dominates. China has already decimated Europe’s solar industry. Most of the remaining ‘European’ solar companies have moved their production to China.

Automotive and wind equipment manufacturing will probably be next. Chinese industrial oversupply will squeeze European competitors and deepen long-term dependence. Chinese vehicle sales in Europe have surged in recent years. Meanwhile, ‘European’ automobile and wind manufacturers are shifting their production to China, hollowing out employment and value creation at home. Some may dismiss the loss of wind manufacturing in Europe as manageable, but the risk to Europe’s automotive sector is far more serious. Automaking is a strategic industry across the continent and its decline would have profound economic and political consequences in Germany, France, the UK, Italy, and others.

Local manufacturing requirements offer one potential response. But highly automated Chinese manufacturing operations in Europe might generate few local jobs and limited transfer of intellectual property, depending on the sector. Chinese battery giant CATL is lobbying Spain’s government to allow 2,000 Chinese engineers, technicians, and managers to work on establishing a €4.1 billion manufacturing plant in Zaragoza.

There are broader economic risks beyond the low-carbon sector. Europe’s trade deficit with China, already in excess of €305 billion annually, will worsen. China’s commercial advantage will strengthen: as its firms gain market dominance, they will have greater ability to raise prices. This is a basic dynamic of trade, even before geoeconomics is layered on top.

The long-term consequences of allowing China to dominate technologies central to the future economy are also severe. China is already advancing rapidly in science and engineering R&D and high-tech manufacturing, with benefits for other disciplines such as robotics and arms. Europe’s AI ecosystem – considered a strategic priority by many European governments – is increasingly dependent on Chinese batteries. If China restricted battery exports, AI development would slow.

Over-dependence on China for low-carbon technology ultimately places Europe’s energy transition and pursuit of energy security at risk. At the very moment that Europe is seeking ‘energy sovereignty’ through low-carbon technology – as a solution to the geopolitical and geoeconomic shocks affecting global fossil fuel markets – it risks replacing one set of economic dependencies with another.

Unchecked dependence on cheap Chinese technology will not benefit European economies; it will damage them.